assignment of assets from one company to another

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How to transfer assets from one company to another.

Orange sign with white letters displaying the word 'TRANSFER'.

There are various reasons why it may be necessary to transfer assets between two companies. In this blog, we will consider how this can be done, and some of the reasons for doing so, from the perspective of company restructuring (as opposed to acquisition).

Why would I want to transfer assets between companies?

Company assets can include money, goods, real estate, and intellectual property. Other than acquisitions (where these assets will normally be transferred to the purchasing company as part of the sale), reasons for transferring assets between companies include:

Creating a holding structure

Creating a parent-subsidiary (group) company structure can help mitigate risks by cushioning the holding company from the liabilities incurred by their actively trading subsidiaries.

Normally the key assets in a group of companies are transferred to a non-trading holding company to protect them from risks incurred by the trading subsidiaries.

Diversification

Company owners who wish to diversify their products and services, or go in a new direction, may decide to set up a secondary company. In this case, it may be necessary to transfer some assets to the new company to provide it with the necessary investment (e.g., before it starts generating revenues).

Pre-sale preparation

Company owners who are looking to sell their businesses may want to hold on to certain assets (e.g., intellectual property) to prevent them from being included in the sale. If they intend to start trading again in the future, it may be sensible to set up a new company and transfer these assets.

How to transfer assets between two companies

The transfer process itself can take the form of a contract for the transfer/purchase of business assets.

In the case of money transfers, these can be done as a loan or by purchasing shares in the other company, or through dividend payments if shares in the transferor company are owned by the recipient company.

However, depending on whether or not the companies are both part of the same group, there can be taxes to pay.

Non-group companies

Assets can be transferred between two separate limited companies (i.e., which do not form part of a group), but it should be noted that Capital Gains Tax (CGT) will be payable by the recipient company if the assets are transferred free of charge or below the fair market price.

There are a variety of rules which apply to CGT , and different rates that relate to the disposal (sale or transfer) of assets. In this scenario, the best option will generally be to sell the assets to the new company at a fair market value to avoid CGT.

Group companies

Assets can be transferred between companies that form part of a ‘group’ structure without being liable for CGT. This is part of the “ no gain/no loss rule ” in the Taxation of Chargeable Gains Act 1992 s 171 (1) , which ensures that “ assets can generally be moved around a group of companies without any immediate capital gains consequences. This recognises that business activities carried on within the overall economic ownership of a corporate group, within the charge to corporation tax, should, in broad terms, be tax neutral. ”

To meet the CGT exemption rules that apply to group companies, it will be necessary for there to be (i) at least one subsidiary company and (ii) one parent company that owns at least 75% of each subsidiary.

Parent companies and subsidiary companies can be set up in exactly the same way as any other limited company is formed, as long as the parent owns the requisite shares in the subsidiary.

Author: Nicholas Campion

Nicholas Campion, is a Director and a Chartered Secretary. He has attained considerable experience in the field after working in client-facing roles for leading international providers of corporate services. In his spare time, Nicholas enjoys writing, painting, and aviation, and is also a fair-weather supporter of Derby County.

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18 Comments

If my client plans to transfer, few assets to its group CO. We have the Fair Value share of the transferring Co. , as on 31 Dec 2022 in the Investments proposed to be transferred.

We have the details of the COST of these Investments proposed to be transferred (from clients Finance team) and CARRYING VALUE as on date of transfer.

As we are transferring the Investments to a related CO. Should we consider either COST / Carrying Value for computing the Goodwill?

Will there be Goodwill involved in this case and whether it needs to be computed, as the Investment assets re getting transferred from one Co. to its Sister concern. Please advise

Thank you for your enquiry, Jignesh.

I’m afraid we are unable to provide advice on tax considerations on specific scenarios, and we would strongly suggest you seek the advice of an accountant on this matter.

Having said that, in relation to your query regarding goodwill, you may find the information (which has been quoted form the ACCA website) helpful:

Goodwill arises when one entity (the parent company) gains control over another entity (the subsidiary company) and is recognised as an asset in the consolidated statement of financial position. Under IFRS 3, Business Combinations, goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognised. Goodwill is not amortised but must be tested annually for impairment.

For your benefit and understanding we include an explanation from BDO of IFRS 3 Business Combinations and IAS 36 Impairment of Assets, which will assist you in the preparation of the assessment when testing for impairment at each reporting date.

IFRS 3 Business Combinations: https://www.bdo.global/getmedia/c0df84a6-d172-465a-8346-7559f4ecbfa1/IFRS-3-AAG.pdf.aspx IAS 36 Impairment of Assets: https://www.bdo.global/getmedia/fd3078e0-d4a0-4ddf-be7c-9143adc0401b/IAS-36-AAG.pdf.aspx ACCA website: https://www.accaglobal.com/gb/en/student/exam-support-resources/fundamentals-exams-study-resources/f7/technical-articles/accounting-for-goodwill.html

We trust this information is of use to you.

Kind regards, The QCF Team

There is well established partnership (or Society in Mauritian context – same characteristics of a partnership) – but the partners have made a valuation and has proposed to sell a percentage to a new person – as a new partner

A valuation has been made and accepted by the parties and the proposed % share in the partnership to the newcomer has been accepted.

But in the meantime – before making the changes and to amend the partnership deed % holding structure – the existing partners have decided to set a limited company

And to absorb the fixed assets of the partnership and to carry on with the same business line which is : a care home for the elders and persons who are in need of special care after an operation or other medical issues

They are using same valuation – done for the partnership and the proposed percentage shareholding in the new set up limited company to the new person.

My question is;

IS IT LEGAL TO USE THE SAME VALUATION DONE FOR THE PARTNERSHIP AND APPLY SAME TO THE NEW COMPANY – WHICH IS NOT IN OPERATION YET.

BUT THE NEW COMPANY WILL DO SAME BUSINESS OPERATIONS

Thank you for your kind enquiry, Asif.

Unfortunately, we only specialise in UK company law, and we cannot provide advice relating to companies based in Mauritius.

We are sorry we cannot be of more assistance in this instance.

Hi , Can a parent company transfer its share it has in the other company to its subsidiary?

Thank you for your kind enquiry, Thomas.

From a company secretarial perspective, there’s nothing wrong with transferring shares held by a parent to one of its subsidiary companies. Restructures like this are common and can take place for a variety of reasons. A standard transfer of shares procedure is usually sufficient to achieve this.

Hi, If a subsidiary has been set up for the purposes of separating trading (of the parent company) from investments, is it right to say that the parent would be able to move an asset such as an existing share dealing account portfolio to the subsidiary without creating a tax liability for either entity ? Thanks

Thank you for your message.

Please note that we are not accountants and cannot provide advice on specific scenarios. However, if the transfer is between two entities that form part of the same group, then any usual capital gains tax liabilities here may still be exempt. Having said that, we would strongly encourage you to seek professional advice from an accountant to make sure.

I am sorry we cannot be of more assistance on this occasion.

Hello, we are wanting to sell all of our assets to a new company.. Do we use fair market value cost, and do the new company start a new asset depreciation list? What other information will I we need to sell the assets?

Thank you for your kind enquiry.

Generally speaking, and assuming the two entities are not a part of the same group, it is usually best to sell the assets at fair value costs, due to its impact on Capital Gains Tax.

Whether you require an asset depreciation list will largely depend on the actual type of assets being sold.

With regard to other information you may need as part of the contract, we really cannot give advice on specific scenarios. Also, because of the potential tax and accounting considerations involved in this process, we would suggest you seek the advice of an accountant.

Kind regards The QCF Team

Hi, We want to move some assets from Japan to India and these are calibration Kits developed in Germany. Can we move these as the transfer of an asset as we are the same companies of Group in a different country with the Same business?

I’m very sorry but we can’t advise on specific scenarios such as this.

We hope you are able to find an answer to your question.

Regards, The QCF Team

Hi, Please can you advise. Me and my brother have a limited company together with equal shares, we are looking at dividing the property’s within the company and transferring my share to another company which I will own in my name only, and the original company will be kept in his name. What are the implications regarding tax. Thanks

Thank you for the question.

I’m very sorry but we can’t advise on specific scenarios such as this.

We recommend discussing this with an accountant.

My UK company has a wholly owned subsidiary company that has property and other assets. I wish to transfer all assets to the UK company and have the property registered in the name of the UK company. Who can I employ to complete the formalities.

Thanks for getting in touch.

It sounds like a contract will need to be put in place to transfer the assets from one entity to the other – we recommend contacting a solicitor to assist with this.

The article is very helpful and you have prompted the following question about the CGT position for a company owning the freehold for leasehold properties. When ‘group’ companies have been set up, can one company be limited by guarantee and the holding company limited by shares? If this is permitted, can assets comprising the freehold interest in 66 leasehold flats be transferred to the company limited by guarantee without incurring a CGT liability? If the freehold company then allows lease extensions to take place, can they be at a nil premium?

Thanks for the question!

There’s nothing in the Companies Act 2006 to say that a company of different forms (including a limited by shares and limited by guarantee) can’t be within the same group.

Indeed, in large structures, it is not uncommon to find different corporate entities under one group. The key point is that, as separate legal entities, a limited by shares company can be a member of a limited by guarantee company, and vice versa.

In regards to your question on Capital Gains Tax liability, I’m afraid we are unable to provide advice on specific scenarios. If you are unsure, I recommend seeking advice from an accountant.

Original text

When you form an LLC, you will need to transfer assets into the company in order to properly capitalize the business. If you have business partners, they too will contribute assets in exchange for an ownership percentage.

Capitalization is critical to your LLC. Bank loans are nearly impossible to receive for business owners with no equity in their company. In addition, members of an under-capitalized LLC may be found ineligible for the liability protection generally provided by an LLC.

Let's look at how transferring assets works.

Capital contributions.

A capital contribution is an asset given to your LLC in exchange for equity (the value of your ownership percentage). An asset can be cash, property, or professional services.

Most capital contributions are tax-free . If you initially invest $10,000 in your LLC as a capital contribution, you would receive $10,000 of equity. You would not be required to pay a capital gains tax on your new equity. This same rule applies to your LLC, which would not pay a tax on the $10,000 of new working capital.

Cash is simple. More complicated is the transfer of property, such as computers, vehicles, or real estate. When transferring property, you must properly record the Fair Market Value (FMV) of the property, what you paid for it originally, as well as any depreciation . FMV and depreciation affect both the equity you receive as well as the company's tax basis.

Capital contributions must be carefully recorded in your Operating Agreement. Undocumented contributions often lead to significant tax concerns later on.

The following information should be recorded in your Operating Agreement:

Name, address, and SSN/EIN of the member and LLC
Description of asset
Value of asset
Date of contribution
Ownership percentage received
All liabilities assumed with the asset
Written transfer document (if applicable)
Adjusted basis of asset (if applicable)

Sale & Purchase

Instead of transferring assets as a capital contribution, you can also sell assets directly to your LLC. The most significant difference between a contribution and a sale is that the sale creates no equity in the company.

For example, if you sold a chunk of land to McDonald's and a drive-in was later built on the property, you would not receive shares of McDonald's stock in return for the land.

Sales are also not without certain tax implications, both for you, the seller, and your LLC, the purchaser.

Let's say you sell a car for $10,000 to your LLC. The cash you receive is now a taxable gain which must be reported on your income tax return. As well, your LLC has received an asset with a depreciable basis ($10,000 which will depreciate over time).

Asset purchases should be as carefully recorded as capital contributions, although there is no reason to record purchases in your Operating Agreement . Instead, you should keep careful records of each purchase and ensure that all titles and deeds are properly transferred into the name of the LLC.

Filing an Asset Transfer Document

Certain assets come with deeds or titles proving ownership. With these assets, correct transfer requires that a Transfer Document be filed and a new deed or title issued.

You can obtain a Transfer Document from the agency where the original deed/title is filed. For example, a vehicle title is generally filed with your local Department of Licensing. You can fill out the Transfer Document and then bring it to a notary. Once the document is notarized, you can file the original deed/title and the Transfer Document with the filing agency. A new deed/title will be issued showing that your LLC is now the owner.

If you are transferring an asset with a lien or mortgage, you will need written permission from the bank or lender in order to complete the transfer. The lender will want to assess the creditworthiness of your LLC before allowing the transfer.

Fraudulent Transfer of Assets

Not all asset transfers are legal. A fraudulent transfer or fraudulent conveyance is a transfer that is undertaken to hide assets from or put assets out of the reach of creditors. It can also, however, be done by mistake by new entrepreneurs not fully aware of how asset transfers work.

When examining asset transfers, a court will look for three primary elements:

Was the transfer made with the intent to defeat creditors?
Was the debtor insolvent at the time of the transfer or made insolvent by the transfer?
Was the transfer without reasonably equivalent value?

Reasonably equivalent value refers to the value you receive in return for transferring an asset to your LLC. Let's say you transfer a piece of property valued at $100,000 to your LLC, and in return, you received $50,000 cash. While you received value through the transfer, you did not receive reasonably equivalent value, because the LLC paid you far less than the asset was worth. In this instance, the court may rule that the transfer was fraudulent and thus voidable.

To evaluate the reasonable equivalent value, a court will examine Fair Market Value; whether or not a transfer was made in good faith in the ordinary course of business; value of competitive bids; and the net effect on the debtor's estate with respect to funds available to unsecured creditors.

Pros and Cons of the Popular Business Entities: Sole Proprietorship, LLC, S Corp and C Corp This webinar will discuss the most common business entities to help you navigate this important decision, and what changes you need to know for this year.

What Should Your LLC's Operating Agreement Include? In addition to filing your articles of organization with the state, you should also set internal ground rules for how you manage and run your LLC.

Funded, in part, through a Cooperative Agreement with the U.S. Small Business Administration. All opinions, and/or recommendations expressed herein are those of the author(s) and do not necessarily reflect the views of the SBA.

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LLC Membership Interest Assignment

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An LLC Membership Interest Assignment is a document used when one member of an LLC, also known as a limited liability company, wishes to transfer their interest to another party entirely. LLC Membership Interest Assignments are often used where a member in an LLC is leaving or otherwise wants to relinquish the entirety of their interest in the company.

An LLC Membership Interest Assignment normally happens well after the LLC has already been operating . To form a limited liability company in most states, any party must begin with Articles of Organization (sometimes called Certificates of Formation or other varying names). These documents will get the LLC formed and in compliance with state laws.

A limited liability company can operate and be formed for any reason (except illegal ones). For example, even if it is a small business, like dog-walking, the owners might want to have an LLC to protect themselves. If so, and if any owner decided to one day relinquish their interest in the LLC , that owner could use this LLC Membership Interest Assignment to assign it to another person.

LLC Membership Interest Assignments are short, relatively easy documents which contain all the information needed to transfer an interest in an LLC.They contain a place for both the person transferring the interest (called the Assignor) and the person receiving the interest (called the Assignee) to execute the document.

How to use this document

This document can be used when any party would like to transfer the ownership of an interest in an LLC or when any party would like a membership interest in an LLC transferred to them, as long as the current owner of the membership interest agrees. It should be used it when both parties understand that the membership interest will be completely assigned and wish to create a record of their agreement, as well as a document that the LLC will likely keep on file.

This document will allow the form-filler to input details of the identities of both parties, as well as the details of the membership interest, such as percentage and whether or not it comes with voting rights . It also has an optional addendum at the end, in case full consent is needed from all the rest of the members of the LLC .

Please keep in mind that this form requires both signatures , from the party assigning the interest and the party receiving it.

Applicable law

LLC Membership Interest Assignments are subject to the laws of individual states . There is no one federal law covering these documents, because each individual state governs the businesses formed within that state.

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Guides to help you

How to Sell your Percentage in an LLC
How to Sell your Business
How to Transfer Business Ownership

Business Structure - Other downloadable templates of legal documents

Articles Of Organization
Shareholder Agreement
Articles Of Incorporation
Partnership Agreement
Business Sale Agreement
Corporate Bylaws
Stock Sale and Purchase Agreement
LLC Membership Purchase Agreement
Founders' Agreement
Business Merger Agreement
Limited Partnership Agreement
Other downloadable templates of legal documents

Sale and Assignment of LLC Membership Interests

Transfers from Member to Member or to Non-Member Third Parties by David J. Willis J.D., LL.M.

Introduction

This article addresses legal points to consider when conveying a membership interest in a limited liability company from one individual to another. It does not address the initial issuance of such interests when the LLC is formed, nor sales of membership interests by an existing LLC to incoming members.

Additionally, this article addresses absolute assignments (full and final transfers) rather than collateral assignments (made only as security for a loan) which are a different topic entirely.

Assignments of this type may follow the execution of a letter of intent which provides for a due-diligence period. This article does not cover the contents of such an LOI but does address issues that should be considered by a prospective assignee in conducting due diligence. An LOI will often make reference to specific due diligence steps that a buyer will be permitted to take.

After covering definitions and applicable law, we will turn to principal points that should be considered in negotiating and drafting an assignment of LLC membership interest.

APPLICABLE LAW

Relevant statutory definitions.

Applicable law is found in the Business Organizations Code (BOC):

Bus. Orgs. Code Section 1.002. DEFINITIONS

(7) “Certificated ownership interest” means an ownership interest of a domestic entity represented by a certificate issued in bearer or registered form.

(32) “Fundamental business transaction” means a merger, interest exchange, conversion, or sale of all or substantially all of an entity’s assets.

(35)(A) “Governing authority” means a person or group of persons who are entitled to manage and direct the affairs of an entity under this code and the governing documents of the entity, except that if the governing documents of the entity or this code divide the authority to manage and direct the affairs of the entity among different persons or groups of persons according to different matters, “governing authority” means the person or group of persons entitled to manage and direct the affairs of the entity with respect to a matter under the governing documents of the entity or this code.

(41) “Interest exchange” means the acquisition of an ownership or membership interest in a domestic entity as provided by Subchapter B, Chapter 10. The term does not include a merger or conversion.

(46) “Limited liability company” means an entity governed as a limited liability company under Title 3 or 7. The term includes a professional limited liability company.

(53) “Member” means: (A) in the case of a limited liability company, a person who has become, and has not ceased to be, a member in the limited liability company as provided by its governing documents or this code. . . .

(54) “Membership interest” means a member’s interest in an entity. With respect to a limited liability company, the term includes a member’s share of profits and losses or similar items and the right to receive distributions, but does not include a member’s right to participate in management.

(64) “Ownership interest” means an owner’s interest in an entity. The term includes the owner’s share of profits and losses or similar items and the right to receive distributions. The term does not include an owner’s right to participate in management.

(69-b) “Person” means an individual or a corporation, partnership, limited liability company, business trust, trust, association, or other organization, estate, government or governmental subdivision or agency, or other legal entity, or a protected series or registered series of a domestic limited liability company or foreign entity.

(87) “Uncertificated ownership interest” means an ownership interest in a domestic entity that is not represented by an instrument and is transferred by: (A) amendment of the governing documents of the entity; or (B) registration on books maintained by or on behalf of the entity for the purpose of registering transfers of ownership interests.

A well-drafted assignment of LLC membership interest will be mindful of and consistent with these statutory terms.

Statute Authorizing LLC Membership Assignments

Foundational to the idea of a sale and assignment of LLC membership interest is the legal authority to enter into such a transaction in the first place:

Bus. Orgs. Code Sec. 101.108. ASSIGNMENT OF MEMBERSHIP INTEREST

(a) A membership interest in a limited liability company may be wholly or partly assigned.

(b) An assignment of a membership interest in a limited liability company: (1) is not an event requiring the winding up of the company; and (2) does not entitle the assignee to: (A) participate in the management and affairs of the company; (B) become a member of the company; or (C) exercise any rights of a member of the company.

Consent by other members is required. BOC Section 101.103(s) states that a “person who, after the formation of a limited liability company, acquires directly or is assigned a membership interest in the company or is admitted as a member of the company without acquiring a membership interest becomes a member of the company on approval or consent of all of the company’s members.” BOC Section 101.105 states that a “limited liability company, after the formation of the company, may: (1) issue membership interests in the company to any person with the approval of all of the members of the company. . . .”

An additional consent requirement is found in BOC Section 101.356(c) which provides that, for the most part, “a fundamental business transaction of a limited liability company, or an action that would make it impossible for a limited liability company to carry out the ordinary business of the company, must be approved by the affirmative vote of the majority of all of the company’s members.”

Accordingly, it is advisable to accompany an assignment of membership interest with a special meeting of members that approves and ratifies the change. One or more LLC resolutions may be produced as well. All affected parties (and their spouses, even if non-members) should sign off.

What category of property is an LLC membership interest?

Regardless of the type of property owner by a limited liability company, a membership interest in the LLC is personal property:

Bus. Orgs. Code Sec. 101.106. NATURE OF MEMBERSHIP INTEREST

(a) A membership interest in a limited liability company is personal property.

(a-1) A membership interest may be community property under applicable law.

(a-2) A member’s right to participate in the management and conduct of the business of the limited liability company is not community property.

(b) A member of a limited liability company or an assignee of a membership interest in a limited liability company does not have an interest in any specific property of the company.

The characterization of an LLC membership interest as personal property is important because it also signifies what it is not . For instance, it is not a real property interest even though the LLC may own real estate. It is not a negotiable instrument subject to the Uniform Commercial Code (found in Texas Business & Commerce Code Section 3.201 et seq.). Nor is a small-business LLC membership interest usually considered to be a security subject to state and federal securities laws: “An interest in a partnership or limited liability company is not a security unless it is dealt in or traded on securities exchanges or in securities markets, [and the company agreement] expressly provide[s] that it is a security . . . or it is an investment company security.” Tex. Bus. & Com. Code Sec. 8.103(c).

The foregoing applies regardless of whether the membership interest is considered certificated or uncertificated.

Statutory Qualifications for LLC Membership

Qualifications and requirements for membership in an LLC are found in the BOC:

Bus. Orgs. Code Sec. 101.102. QUALIFICATION FOR MEMBERSHIP

(a) A person may be a member of or acquire a membership interest in a limited liability company unless the person lacks capacity apart from this code.

(b) A person is not required, as a condition to becoming a member of or acquiring a membership interest in a limited liability company, to:

(1) make a contribution to the company; (2) otherwise pay cash or transfer property to the company; or (3) assume an obligation to make a contribution or otherwise pay cash or transfer property to the company.

(c) If one or more persons own a membership interest in a limited liability company, the company agreement may provide for a person to be admitted to the company as a member without acquiring a membership interest in the company.

Rights and Duties of an Assignee

BOC Sec. 101.109. RIGHTS AND DUTIES OF ASSIGNEE OF MEMBERSHIP INTEREST BEFORE MEMBERSHIP

(a) A person who is assigned a membership interest in a limited liability company is entitled to:

(1) receive any allocation of income, gain, loss, deduction, credit, or a similar item that the assignor is entitled to receive to the extent the allocation of the item is assigned; (2) receive any distribution the assignor is entitled to receive to the extent the distribution is assigned; (3) require, for any proper purpose, reasonable information or a reasonable account of the transactions of the company; and (4) make, for any proper purpose, reasonable inspections of the books and records of the company.

(b) An assignee of a membership interest in a limited liability company is entitled to become a member of the company on the approval of all of the company’s members.

(c) An assignee of a membership interest in a limited liability company is not liable as a member of the company until the assignee becomes a member of the company.

BOC Sec. 101.110. RIGHTS AND LIABILITIES OF ASSIGNEE OF MEMBERSHIP INTEREST AFTER BECOMING MEMBER

(a) An assignee of a membership interest in a limited liability company, after becoming a member of the company, is:

(1) entitled, to the extent assigned, to the same rights and powers granted or provided to a member of the company by the company agreement or this code; (2) subject to the same restrictions and liabilities placed or imposed on a member of the company by the company agreement or this code; and (3) except as provided by Subsection (b), liable for the assignor’s obligation to make contributions to the company.

(b) An assignee of a membership interest in a limited liability company, after becoming a member of the company, is not obligated for a liability of the assignor that:

(1) the assignee did not have knowledge of on the date the assignee became a member of the company; and (2) could not be ascertained from the company agreement.

It is important to note that these statutory rights and duties are subject to “restrictions and liabilities” that may be imposed by the company agreement.

PRELIMINARY CONSIDERATIONS

The company agreement.

When considering a transfer of LLC membership, it is important to first check the company agreement (operating agreement) to determine if there are buy-sell provisions or a right-of-first-refusal clause that must be worked through before the membership interest can be assigned. company agreements often require that before a sale and assignment of a membership interest can occur, the interest must first be offered pro rata to the other members, and/or to the company itself, before a transfer may be made to a person who is not currently a member. Unless waived, such provisions may be accompanied by an offer period of (for example) 10, 30, or 60 days.

Buy-sell and right-of-first-refusal provisions exist so that existing LLC members do not unwillingly find themselves in business with someone they do not know.

Non-Member Spouses

Are non-member spouses involved? Like real estate, personal property in Texas is presumed to be community property. A frequent error in transfers of LLC membership interest is failure to secure the signature of an assignor-seller’s non-member spouse. The result is that the entire interest may not have been conveyed, at least not in Texas. This is no different than if a grantee in a deed accepts the conveyance without requiring execution by the grantor’s spouse; since community property is presumed, the transfer may be incomplete if the spouse does not sign off, at least in a pro forma capacity.

To say that omitting the signature of a non-member spouse can drive subsequent disputes would be an understatement. Even though BOC Section 101.108 provides that a non-member spouse of an assignee may not assert control over the company, the potential for awkward and potentially disastrous disruption remains. Consider the case of a withdrawing member who is contemplating divorce but has not yet revealed this to other members who may want to buy his LLC membership interest. Will the assignment get tangled up in the parties’ divorce?

As is the case in transfers of real estate, it is common for sellers of an LLC membership interest to argue that the spouse should not be required to sign the assignment because the property transferred is a business asset rather than a part of the homestead. Real estate lawyers hear such excuses all the time. Other reasons may be given (“My wife is in China”). None of these excuses should be allowed to carry any weight unless the membership interest has been lawfully converted into separate property by a written partition agreement according to Section 4.102 et seq. of the Family Code.

What will be the accounting consequences? Is timing an issue?

There will likely be accounting consequences as a result of transferring an LLC membership interest. BOC Section 101.201 partially addresses this issue, stating “The profits and losses of a limited liability company shall be allocated to each member of the company on the basis of the agreed value of the contributions made by each member, as stated in the company’s records. . . .” This rule will apply unless the members collectively agree otherwise.

Attention should be given to the effective date of the assignment, since the transfer date may have more than one level of significance. It is advisable to select an effective date or record date for the assignment that facilitates easier calculation of profits and losses, or at least does not unduly complicate that calculation.

Will the membership interest pass a due-diligence inspection?

The issues referred to above are part of a larger group of due-diligence considerations that may concern a prospective buyer, which brings us to the due-diligence checklist in the next section.

DUE DILIGENCE BY THE ASSIGNEE-BUYER

Due diligence checklist.

The following is a partial list of items that should be of concern to a prospective assignee-buyer of an LLC Membership Interest:

(1) Valuation . Most small-business assignments of LLC membership interest occur among insiders who are already acquainted with the company’s assets, liabilities, management, and operations. For potential assignees who do not fall in this category, the question of valuation arises—not just valuation of the membership interest itself but valuation of the LLC as a whole, since the two are effectively inseparable.

Several articles could be written on how to evaluate and appraise a business; suffice it to say that there should be some rational basis for the asking price that can be independently confirmed by looking at the company’s finances and assets. Certain numbers will be hard (real property and bank accounts) and others will be soft (marketing strategy, proprietary information, and value of the brand).

If assets include real properties, an evaluation of value may include appraisals by licensed appraisers or the less-formal alternative of a broker price opinion (BPO). It is impressive if a real estate investment firm has an inventory of 30 rental properties; it is less so if half the properties are drowning in deferred maintenance. Numbers guys may be satisfied with financials and a spreadsheet; traditionalists will want to physically inspect the properties as part of the due-diligence process.

(2) Good Standing . It is important to verify that the LLC and the assignor (if a registered entity) are in good standing with the secretary of state and the comptroller. If not, they do not have the legal capacity to do business, which could potentially make execution of an LLC membership assignment invalid.

(3) Core LLC Documents . A prospective assignee-buyer will want to see core LLC documents including the certificate of formation; the certificate of filing (the secretary of state’s approval); the minutes of the first organizational meeting of members along with subsequent minutes of special meetings (if any) and annual meetings; company resolutions or grants of authority; the company agreement, as currently amended or restated; and any membership certificates that may have been issued (or at least a record of same).

Also: where are the official LLC records kept? Who is responsible for keeping them, and is access readily available? Is there a company book, i.e., a binder containing these? Failure of an LLC to keep organized and complete records is a warning sign for a potential assignee. This is true regardless of and aside from any statutory requirements for LLC record keeping.

A vital object of an assignee’s investigation should be the company agreement. The company agreement is essentially a partnership agreement among LLC members, so it will directly bind a prospective assignee . Is it valid? Is it a legal document of substance or is it a three-page printout from the internet that is not even relevant to Texas? Are provisions of the company agreement compatible with the intentions and goals of the assignee? What limitations does the company agreement impose (for example, restrictions on transfer of membership interests)? Can one easily re-sell the membership interest or are there hoops to jump through?

(4) Managers . It is operationally important to determine if the LLC is member-managed or manager-managed and, if the latter, to identity of the managers. Can the assignee work with these persons? Are they professional and competent? What is their track record?

(5) Member List . LLCs are required to keep current lists of members, their respective interests in the company, and a list of all contributions to the company. BOC Sections 101.501(a)(1)-(7). Fellow members of a smaller LLC are effectively your partners in the enterprise. It is good to know to know something about them.

(6) Contracts and Agreements with Third Parties . Any agreements with third parties that affect control, management, or operation of the LLC should be examined. Examples would be contracts with vendors or a property management agreement with a third-party management company. Is the LLC currently part of a joint venture with a different group of investors?

(7) Voting Agreements . These may or may not exist. Any one or more of the members may enter into voting agreements (including but not limited to proxies and pledges) that can affect control of the entity.

(8) Federal Tax Returns. Tax returns are important to verify how the LLC is taxed and how ownership is reported to the IRS. Tax returns and LLC records should be consistent in this respect. It is a good idea for a prospective assignee to have a CPA review the company’s tax returns.

(9) Texas Annual Filings . A prospective assignee should review the franchise tax returns and public information reports (PIRs) that must be annually filed with the comptroller’s office. Do these accurately reflect the LLC’s affairs? Are they diligently prepared and timely filed?

(10) Transactional Records . What property does the LLC own? Are warranty deeds in the name of the LLC duly recorded in the real property records? How are properties managed and who is responsible for doing so? What do the files and records look like—are they orderly or are they a mess? And what about completeness? Do files for rental properties contain all essential documents like warranty deeds, notes and loan agreements, deeds of trust, leases, appraisals, maintenance records, and so on? A specific person should be responsible for keeping such records at a designated location.

(11) Salaries, Draws, and Distributions. These should be examined to discover if there is a pattern of excessive or erratic compensation to managers or distributions to members. Is there a coherent schedule or plan? Are measures in place to insure that the LLC maintains sufficient working capital to fund existing and planned operations?

(12) Bank and Depository Accounts . Current and recent copies of account statements should be examined. Look for any unusual withdrawals or capital flows. Is the LLC adequately capitalized? Does it have an adequate capital reserve? Inadequate capitalization is the number one cause of small business failure.

(13) Records of Pending, Prospective, and Resolved Legal Actions . Is the LLC being sued? Has it been sued in the past? Do the managers have a history of shoddy or deceptive dealings? Is the LLC continually receiving DTPA notice letters from attorneys? Default letters from HOAs or appraisal districts? Does the company charter get periodically revoked (and then have to be reinstated) because the LLC fails to timely file its franchise tax return or PIR? Consider meeting with the LLC’s attorney and CPA. Require that confidentiality be waived in order to get a frank assessment of the situation.

(14) Best Practices Generally . It is important to ascertain whether or not the LLC is run with diligence, integrity, and in compliance with applicable law. What is the company culture with regard to best practices? Does the LLC have a regular business attorney and CPA to advise the managers? Or do the managers wing it on a DIY basis most of the time, counting on a surging market to cover their mistakes?

(15) Reputational Evidence . A prospective assignee may want to do some digging in order to evaluate the business and personal reputations of the managers and members. What is their professional history? The personal lives of the existing members may also be relevant: are any of them getting a divorce from a spouse who might turn into a hostile party? Was one of them just expelled from the country club for non-payment of dues? An internet search is, of course, the bare minimum but it may also be prudent to consider a private investigator (These are not just for the movies).

(16) Company Performance . How have the LLC’s investments fared, particularly over the last three years? What do the company accounts show and are these numbers verifiable? Does the spreadsheet match up with the checkbook?

Trends are an important part of value analysis. Try to reduce the LLC’s quarterly and annual results to line graphs for income and costs. Which way are these factors trending?

(17) Business Plan . Do the managers and members have specific goals or is their strategy more built around finding targets of investment opportunity? Is their plan realistic or pie-in-the-sky? What will the company likely look like in three years? Five years? Is a change in direction required?

The importance of thorough due diligence conducted during an adequate inspection period cannot be understated. Knowledge, as they say, is power. If one must sign a confidentiality or non-disclosure agreement in order to get relevant information on the LLC and its members, then that is what should be done.

CLAUSES AND PROVISIONS OF THE ASSIGNMENT

Assignments of interest generally.

All assignments of interest (regardless of the interest assigned) include—or should include—certain common clauses and provisions. After identifying the parties and the exact interest to be assigned, the document should state the consideration being paid; whether the consideration is nominal, cash, or a financed amount (secured or unsecured); recite both transfer and acceptance language; state whether the assignment is made entirely “as is” or instead with representations and warranties; state whether the assignee will have any recourse in the event certain post-assignment conditions are not met and identify the recourse mechanism; recite covenants and agreements of both parties that will result in the implementation of the transfer along with remedies for default if these measures are not carried out; a mutual indemnity clause; any special provisions agreed to by the parties; an alternative dispute resolution (mandatory mediation) clause; and conclude with various miscellaneous provisions that identify applicable law and venue, advise all parties to consult an attorney, set an effective date, and so forth.

A “Consent of Non-Member Spouses” should be appended if applicable. Exhibits to the assignment (pertaining to company assets and liabilities, for instance) may also be needed.

Representations and Warranties

An assignment may include a full set of representations and warranties (“reps and warranties”), limited reps and warranties, or no reps and warranties at all—in which case the assignment is made entirely as is and (in such cases) is almost always without recourse, meaning there is no defined remedy against the assignor-seller if the LLC membership goes sour for some reason. Representations and warranties may be made by assignor, assignee, both, or neither.

Core reps and warranties are basic assurances to which no reasonable party should object. Reps and warranties can get much more detailed and extensive from there. If attorneys are involved, the reps and warranties section of a contract may be heavily negotiated.

The assignor-seller’s goal is to minimize post-closing liability by transferring the membership interest “as is” to the maximum extent by including only a minimum number of reps and warranties. It should be noted that inclusion of the above-mentioned core items does not impair the ability of an assignor to assign an interest “as is.” For this reason, it is always somewhat suspicious when an assignor refuses to give any reps or warranties at all.

The assignee-buyer instead prefers a longer and more specific list of reps and warranties on the part of the assignor-seller. One of the goals of the assignee in the due diligence process is to ascertain, to the greatest extent practicable, the accuracy of reps and warranties that have been or will be made by the seller.

Examples of Reps and Warranties

Examples of basic reps and warranties would include assurances that each party, if a registered entity, is in good standing; the party has power and authority to enter into the transaction without joinder of others; and there exists no condition or circumstance that would render the transaction illegal or invalid or place the party in breach of an existing contract. Additional near-core items would include assurances that each party has performed adequate due diligence and has consulted an attorney before signing.

Both assignor and assignee should also want to include a statement that neither party is making or relying upon any reps or warranties that are not expressly set forth in the assignment. The goal is to prevent anyone from assuming anything or alleging that certain assurances were oral or implied.

Reps and Warranties: Duration and Default

Once reps and warranties are negotiated, it must be determined how long they will survive closing—if at all. 30 days? 90 days? Indefinitely?

A final issue in this area has to do with remedies for default in the event of breach. Attorneys frequently include a clause requiring that such default be a material (rather than a trivial) breach in order to be legally actionable. The issue is then raised, how does one define material ? One method is to impose a monetary floor, e.g., by confining assignor liability to issues that result in a loss or cost of (say) $10,000 or more.

Assignments Made “As Is”

As noted, an assignor-seller can include basic (limited) representations and warranties and still convey an LLC membership interest “as is.” Many business persons, including lawyers, do not adequately understand this. For example, stating that one has sufficient power and authority to enter into a transaction does not suggest any representation or warranty as to the item being conveyed. It is a core representation that should probably be included in every assignment.

The key to protecting the assignor is a thorough “as is” clause. Just as is true with real estate conveyances, the more thorough and extensive the “as is” clause, the better. One-liners will generally not do. This is particularly true if there have been oral or email negotiations over a period of weeks or months. The goal should be not only to convey the interest “as is” but also to entirely exclude any statement that cannot be expressly found in writing within the four corners of the assignment instrument.

Covenants and Agreements of the Parties

Covenants and agreements address the legal obligations of the parties going forward—specifically what actions they are required to take in order to implement the assignment. Covenants and agreements of the assignor-seller would include, for example, an obligation to promptly endorse and deliver to the assignee-buyer any certificates evidencing the membership interest in question.

The assignee-buyer should also covenant and agree to abide by the company agreement and other governing documents. Since Texas is a community property state, the spouse of a new assignee should also be asked to sign off on this commitment. The best practice is to secure the signatures of both the new assignee and any non-member spouse not only on the assignment but on the company agreement itself.

Additional covenants and agreements of the parties may be (and usually are) included. This is another area that is subject to extensive negotiation and customization to the circumstances.

Recourse by Assignee upon Occurrence of Specified Conditions

The option for some form of limited or conditional recourse may be included in any assignment of interest. In the case of an LLC membership interest, the assignment could provide that, upon occurrence of certain conditions, the assignee would have the right to re-convey the membership interest and receive return of all or part of the consideration. Examples of such conditions would be any adverse event—a negative outcome in a pending lawsuit or zoning proceeding; condemnation of certain LLC property; failure of a pending joint venture; or the discovery that any representations or warranties of assignor were materially false or deceptive when made. The availability of a recourse mechanism is generally time-limited, say for 90 days after closing. Some assignments might also refer to this recourse mechanism as a right to rescind.

In any assignment instrument, the alternative to full or limited recourse is no recourse at all by the assignee-buyer. For example, real estate notes are often sold without (either full or limited) recourse against the assignor-seller in the event that the borrower on the note defaults. In such a case, absent any provision for recourse, the assignee-buyer of the note would then be in possession of a non-performing asset. The remedy is not against the assignor, but to pursue the debtor directly.

Mutual Indemnity

Ideally, and unless there are special circumstances, the assignor and assignee should release and indemnify one another for LLC-related actions, claims, liabilities, and obligations occurring before and after (respectively) the effective date of the assignment. Indemnity provisions are useful and worthwhile, but one needs to clearly understand their limitations. They are not a covenant not to sue.

Non-Compete and Non-Disclosure Provisions

Sale by a departing LLC member to another member may raise concerns that the departing member will utilize proprietary and confidential information in order to compete with the company in the same line of business within the same geographical area. Agreements regarding intellectual property and non-competition are typically stand-alone full-length contracts; nevertheless, it is possible to include compact and enforceable IP and non-compete provisions that fit smoothly and purposefully into a sale and assignment of LLC membership interest. Failing to do this can be an error with serious consequences.

Corporate Transparency Act and FinCEN Reporting

The Financial Crimes Enforcement Network (FinCEN), an arm of the Treasury Department, is charged with rulemaking to enforce the Corporate Transparency Act which was passed in 2021. The CTA contains sweeping requirements regarding the reporting of beneficial interests in LLCs and corporations.

To the extent that a sale and assignment of LLC membership interest constitutes a change in beneficial ownership, then a report to FinCEN will likely be required. The assignment instrument should expressly address the applicability of the CTA and designate which party (usually the assignee) will be responsible for filing a supplemental FinCEN report.

If the burden of FinCEN reporting falls on the assignee, then the assignor may want to include an indemnity clause for added protection. The assignor may also want to limit liability for past FinCEN reporting.

Alternative Dispute Resolution: Mandatory Mediation

Since we live in a litigation nation, it is highly advisable to include a provision that requires mediation prior to commencing legal action. Approximately 80% of mediations result in a settlement. In other words, mediation works, at least most of the time.

A mediation clause should require the conflicting parties to first confer in good faith and attempt to resolve the dispute in a way that accommodates the legitimate interests of both sides. If agreement is reached, it should be reduced to a signed writing and implemented. If not, the parties should then agree to formally mediate the dispute before a certified mediator prior to resorting to litigation or filing any complaint with a governmental or administrative agency.

A mandatory mediation provision should also state where the mediation will be held (which city or county) and for how long (mediations are usually either a half-day or a full day). Each party should commit to bearing its own fees and costs until the mediation is concluded.

Special Provisions and Stipulations

It is useful to include a catch-all special provisions section that allows room for terms that may be specific to the subject transaction and its unique circumstances. These special agreements and provisions frequently arise and this is the place to insert them.

Stipulations are a slightly different concept. For example, an assignment of LLC membership interest may involve a new list of members. It may also require a re-allocation of percentage interests among the remaining members. So it may be beneficial to include a stipulation that after conclusion of the assignment, the new membership list (with accompanying revised percentage interests) will be as described in Exhibit A. This usefully erases any doubt as to the overall final outcome of the transaction.

As previously noted, a special meeting of members is an important companion document to the assignment of LLC membership interest. The meeting, signed by all affected parties, can not only approve the assignment but mention issues such as record date, a general ratification of the assignment and the new member list, and also authorize issuance of new membership certificates.

No Reliance and No Representation Clauses

The assignor-seller (in particular) may want to make it clear that the assignment is made and accepted by the assignee-buyer only after a proper due-diligence investigation and without reliance on any statements or assurances (especially oral ones) made by the assignor-seller or its agents.

Wrap-Up Provision Relating to Execution and Delivery of Documents and Records

It would be an oversight if an assignment of LLC membership interest failed to mention possession and delivery of company books and records, an omission that has resulted in more than a few lawsuits. An agreement to execute and deliver such additional and further documents as may be reasonably necessary to effectuate the purposes of the assignment should cover and include any affected LLC records, including the company book and accounting records. These may need to be transferred to a new assignee-owner or returned to the assignor-seller after due-diligence inspection.

Clients often do not understand why a sale and assignment of LLC membership interest cannot be a simple, one-page document. It is hoped that this article will clarify the answer to that question.

Information in this article is provided for general informational and educational purposes only and is not offered as legal advice upon which anyone may rely. The law changes. No attorney-client relationship is created by the offering of this article. This firm does not represent you unless and until it is expressly retained in writing to do so. Legal counsel relating to your individual needs and circumstances is advisable before taking any action that has legal consequences. Consult your tax advisor as well.

Copyright © 2024 by David J. Willis. All rights reserved. Mr. Willis is board certified in both residential and commercial real estate law by the Texas Board of Legal Specialization. More information is available at his website, www.LoneStarLandLaw.com .

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Transferring Assets to an LLC: Everything You Need to Know

Transferring assets to an LLC is a fairly simple process. It's much like transferring ownership to another person. 3 min read updated on January 01, 2024

Transferring assets to an LLC is a fairly simple process. Because LLCs (limited liability companies) are viewed as entities that can own property just like individuals, transferring assets to an LLC is much like transferring ownership to another person.

How to Transfer Assets to an LLC

LLCs can acquire assets just like corporations and limited partnerships can. There are some differences between these three types of business structures, but, with few exceptions, they have property ownership rights in common. Corporations have officers and directors, limited partnerships have limited and general partners, and LLCs have members and managers.

Assets with titles will require a bill of sale and new title work filed. You'll also need to refile for deeds of trust at the DMV in the appropriate county. Other, simpler items without titles, like cash just require a bill of sale.

Steps for Transferring Assets to an LLC

First, you'll need to hire an attorney to draft a deed that conveys the property to the LLC from the selling party. All LLCs are legally allowed to purchase and sell property in various forms, including real estate. Some LLCs may not be able to own property, but that's only if their operating agreement prohibits it.

In the event that the LLC is also taking over the insurance coverage for the property, the insurance company might need you to provide copies of the LLC's formation documents and a certificate of consent signed by the LLC's members. This will prove that all of the LLC members are on board with the acquisition of the asset.

Next, prepare a bill of sale. If an LLC is purchasing personal assets from another business, the bill of sale should be drafted by the selling party and given to the LLC. You'll want to include the following information in a bill of sale:

An itemized list of everything transferred in the sale (equipment, vehicles, etc.)
Date of sale

Other specific rules might apply depending on the type of assets being transferred. Create a checklist to make sure you don't miss any requirements.

After drafting a bill of sale, you'll need to obtain a leasehold interest on the asset if it's real estate property. If tenant rights are being assigned or transferred to another party, you'll need consent from the owner of the property.

If you're looking to convert your partnership into an LLC by transferring your assets to it, you'll want to complete the process by filing the forms required for this change by the state in which you plan to conduct business. Some states will automatically transfer all of the partnership's assets to the LLC without requiring you to do all of this leg work. You'll still want to make sure that all of the appropriate documents are filed with the county records office.

What Is a Fraudulent Transfer of Assets?

Individuals who are not defaulting on any loans or agreements with normal debts should have no problem conducting an asset transfer to an LLC. But, if an individual tries to transfer assets to get out of paying debts or following through on contracts, this could be considered a fraudulent transfer of assets.

As long as the assets are transferred for legitimate reasons, it's likely that the transfer will be fine in the eyes of the courts. Many business owners are simply restructuring their company or starting a new business . These are good reasons to transfer assets. However, some business owners have tried to transfer assets in an attempt to defraud others. The best way to make sure that your transfer goes off without a hitch and is viewed as legal is to hire an experienced business attorney to help you handle the process.

Thorough documentation is another great way to avoid any issues. Get any bills of sale notarized with a certified date of sale. This will ensure that any future questions regarding the legitimacy or intentions of the sale can be clearly answered. Notaries are easy to find and the notarization process is relatively easy. You'll be thankful that you covered all of your bases if an issue ever comes up in the future.

If you need help with transferring assets to an LLC, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.

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How to Transfer Assets to an LLC

By Marie Murdock

How to Transfer a Deed to an LLC

Transferring assets to an LLC, or limited liability company, is not as difficult as you may think. Even though there may be legal or procedural differences between them, an LLC is an entity that may acquire property in the same manner as a corporation or limited partnership. A corporation consists of officers and a board of directions, a limited partnership consists of general and limited partners, while a limited liability company is comprised of a member or members and sometimes a manager. The method for transferring assets into the various entities is essentially the same.

Prepare or have your attorney prepare a deed conveying real property from the seller to the limited liability company. Unless prohibited by its formation documents, a limited liability company may buy and sell real estate. If the LLC is acquiring title insurance , the title insurance company may require copies of all organizational documents of the company, as well as a certificate or resolution signed by all members of the LLC reflecting their consent to the acquisition of the property by the company. Read More: How to Convert a Partnership Into an LLC

Convey some types of personal property with a bill of sale. If the LLC is buying the personal property assets of a business, a bill of sale may be executed from the seller to the LLC. Bills of sale may convey equipment, rights to the name of the business, automobiles or any other items of personal property. In the case of automobiles, the certificate of title must also be executed by the seller conveying the vehicle to the LLC, and the LLC must register the vehicle in its name. There may be other applicable rules and regulations depending on the type of property.

Acquire a leasehold interest in property. If the asset being acquired is the lease of a building, then an assignment of leasehold interest may be executed from the current lessee, or tenant, to the LLC. Assigning or transferring a tenant's rights in a lease from one party to another will often require the consent of the original lessor, or person who actually owns the building being leased.

Convert your partnership to an LLC. In the event you are one of the partners in a partnership and you, along with other partners, desire to form an LLC, some states will allow you to file forms converting the partnership to an LLC. Depending on the state, conversion may mean that all assets of the partnership now belong to the LLC without the necessity of transferring a title. Appropriate conversion documents, however, should be filed in the county records office to ensure that the transfer of any real estate formerly owned by the partnership will be located in a search of the public records .

The services of an attorney may be required to prepare legal documents of transfer.

Seek the advice of an accountant to discuss any tax issues involved when acquiring property in an LLC. The LLC to which you transfer assets must be formed according to laws of the state where the LLC is located.

First American: Who Signs the Papers at the Closing Table
SubmitYourArticle: A Practical Guide to Assigning and Subletting a Commercial Lease
Limited Liability Company Center: Converting a General Partnership to a Limited Liability Company

Marie Murdock has been employed in the legal and title insurance industries for over 25 years. Murdock was first published in print in 1979 and has been writing online articles since mid-2010. Her articles have appeared on LegalZoom and various other websites.

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What should you think about before assigning IP or assets from one entity to another?

There are several legal and tax implications that may get triggered when you assign ip or assets..

An assignment or transfer of assets, rights, or contracts may occur in several scenarios, including:

Assigning all or part of a company's assets, technology and intellectual property to a different entity as part of a corporate restructuring;
Assigning all or part of a company's assets, technology and intellectual property to a different entity as part of an "asset sale" acquisition;
Assigning just a few contracts or intellectual property assets to another entity in a spin-out transaction, or just to change who has the right/obligation to collect on or fulfill those contracts/rights; or
Assigning the obligation to fulfill debts to another entity when one entity decides to wind-down operations.

So, what kind of legal implications should you keep in mind before going down this road? Consider the following:

Some entities may require board or managerial consent before assigning or transferring assets or intellectual property, especially if it is a major assignment (such as a corporate restructuring, acquisition or spin-out transaction).
Some contracts may have Non-Assignment provisions that would prohibit transfer or assignment. In fact, one of the biggest pieces of "legal due diligence" that the acquiring party will engage in (and also one of the biggest pieces of legal expense incurred) is reviewing assigned contracts to make sure they can be assigned. If there are Non-Assignment provisions in any contracts, then you need to execute a "Third-Party Consent" with the other parties to such contracts to approve the assignment.
If the contracts or intellectual property being assigned have any value associated with them, then an assignment of those assets may trigger taxable gain for the recipient, depending on what the consideration is.
Receiving consideration for the assignment of any assets (including intellectual property) may trigger taxable gain for the assignor, depending on the tax basis of those assets.
Companies should always work with tax and accounting advisors during any asset or IP assignment to make sure assigned assets have the proper accounting allocations, otherwise end-of-year bookkeeping and taxes can become much more complicated.

Because of all of this, Savvi recommends that anybody going through any sort of IP or asset transfer or assignment should talk with legal counsel and tax advisors to understand all of the implications of this sort of transaction.

Assignment and Assumption Agreement Workflow

Savvi Technologies, Inc. is not an attorney or a law firm, and can only provide self-help services at your specific direction. Do not rely on any documents or information from Savvi without consulting an attorney. Savvi may partner with or refer clients to licensed attorneys, but such referral does not constitute an attorney-client relationship until the attorney is officially engaged by the client.

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How can I transfer assets from one of my corporations to another?

By Ryan Himmel • Sep 16, 2010

Opinions expressed by Entrepreneur contributors are their own.

Head of Financial Partnerships, Xero Americas

Ryan Himmel is a CPA and financial technology executive who has dedicated over a decade of his work toward providing solutions to help accountants and small-business owners better run their firms. Himmel currently leads financial partnerships in the Americas for Xero.

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Trademark Attorneys Trusted For Our Experience®

Trademark Assignments: How to Buy, Sell, Or Transfer A Trademark

By Eric Perrott, Esq.

Much like traditional assets such as machinery or real estate, trademarks are assets that can be bought, sold, and transferred. Unlike physical assets, however, trademarks must be transferred in a purposeful way to ensure that the underlying meaning, or “goodwill”, is also transferred.

A trademark could be a word, a phrase, a symbol, or even a shape. However, one thing all different forms of trademarks share are that they represent a single source. They are essentially a shortcut for consumers to bring to mind a company’s quality, customer service, and even values, at a glance. A trademark only has value because of the impact it has on consumers and the exposure consumers have had to that brand.

When transferring a trademark, simply allowing another company to use the trademark is not enough. You must transfer not only the right to the word or image, but also the underlying goodwill behind the trademark.

It is crucial that trademark owners properly transfer, or “assign” their trademarks to avoid delays, confusion, or worst of all, a break in title that could invalidate the earlier use of the trademark and ruin the value of the trademark.

A Trademark Assignment Transfers Trademark Rights

A proper trademark assignment is not just a transfer of registration the way many business assets are transferred. There is a wording specific to trademark assignments known as a “transfer of goodwill” – this is written fully as a transfer of “(1) all the property, right, title and interest in and to the Trademark including all common law rights connected therein together with the registrations therefor for the United States and throughout the world together with the goodwill of the business in connection with which the Trademark is used and which is symbolized by the Trademark; (2) all income, royalties, and damages hereafter due or payable to Assignor with respect to the Trademark, including without limitation, damages, and payments for past or future infringements and misappropriations of the Trademark; and (3) all rights to sue for past, present and future infringements or misappropriations of the Trademark.”

By including those clear rights and benefits, trademark owners make it clear that all the rights associated with the trademark are now the new owners’, including enforcement rights, royalty rights, and licensing rights. However, all responsibilities are also to the new owners, such as ensuring there is no confusion with another mark, that renewals are timely filed, and any misuse of a mark is monitored to ensure the quality assurance associated with the mark.

If the goodwill is not transferred, the new owner is essentially stating that they will not work to maintain the mark’s reputation among consumers.

Common Issues with Preparing and Filing Assignments

When filing an assignment, either current or in the past, the assignment requires:

the proper names of owners – if business entities, then complete names of active business entities
the date any transfer took place, whether in the past or on the date of signing
the language above for all goodwill and interest and rights to sue for past infringement
signatures of both the assignor and assignee – or qualified representatives of those entities

This may seem simple, but when completing a trademark assignment, it is important to understand why each of these items are needed in order to ensure that the transfer is done correctly. The mere fact that the USPTO accepts a recordation of an assignment does not mean it is valid.

One common pitfall of attempting to file an assignment yourself is mixing up assignor or assignee, writing the wrong owner, or assigning the mark to an individual and not a business entity. Before assigning a trademark, ensure that you consider why the transfer is taking place.

For example:

You may be transferring a trademark from one company you own to another as a restructuring of assets, such as a holding company or a change in tax status.
You might have sold the business and all underlying trademark rights in the business name.
You may be transferring a mark according to a will or bankruptcy.
You may be transferring from your name, personally, to a newly created entity

All of these situations have their own nuances and it is easy to confuse who owns the rights with who is receiving them. No matter what, ensure that your assignment matches the owner on the trademark registration. Sometimes a trademark might change hands two or three times, with a few corporate name changes in the middle. You should be able to draw a straight line from the original owner to the new owner, and each step must be documented with the USPTO to ensure the recordation is valid. It might be a multi-step process involving multiple parties and, while complicated, it is essential that the ownership and chain-of-title are both correct.

Another common pitfall occurs when filing other documents, such as renewals. The filer is required to sign a sworn statement that the owner is correct. If the old owner files a renewal in the name of the old organization, the owner may have made a sworn statement that it was the owner of the mark, which could cause delays or even prejudice the registration in future proceedings.

Similarly, if the new owner files, they cannot simply change the name in the renewal. This will cause significant delays, as they will need to prepare an assignment and record it with the USPTO’s assignment branch before the renewal can be filed. If close to deadlines, this could get extremely complicated and cause additional fees or potential loss of rights.

Trademark assignments are an important part of the trademark lifecycle, as they allow trademark owners to buy and sell brands and further benefit from the goodwill represented by their brands. However, trademark owners should carefully consider the content of any assignment documents and ensure that they match the reality of the situation and the requirements of the USPTO.

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Eric Perrott, Esq.

Eric Perrott, Esq. is a trademark and copyright attorney committed to providing high-quality legal services for any sized budget. Eric’s ability to counsel clients through any stage of trademark and copyright development and protection allows him to provide his clients with personalized advice and unique analysis. Eric can be reached directly at: [email protected]. The contents of this blog are for informational purposes only and may not be relied on as legal advice.

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General Trademark Ownership

Transfer And Assignment Agreement

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What is a transfer and assignment agreement.

A transfer and assignment agreement is a legal document that outlines the terms and conditions of the transfer of an employee from one company to another. It also includes the assignment of all rights and obligations, including any IP or confidential information. This document can be used to protect both the employee and the employer in case of any disputes. When negotiating a transfer and assignment agreement, it is important to consider all potential risks and liabilities.

Common Sections in Transfer And Assignment Agreements

Below is a list of common sections included in Transfer And Assignment Agreements. These sections are linked to the below sample agreement for you to explore.

Transfer And Assignment Agreement Sample

Reference : Security Exchange Commission - Edgar Database, EX-10.7 10 dex107.htm FORM OF SALE, TRANSFER AND ASSIGNMENT AGREEMENT , Viewed April 26, 2022, View Source on SEC .

Who Helps With Transfer And Assignment Agreements?

Lawyers with backgrounds working on transfer and assignment agreements work with clients to help. Do you need help with a transfer and assignment agreement?

Post a project in ContractsCounsel's marketplace to get free bids from lawyers to draft, review, or negotiate transfer and assignment agreements. All lawyers are vetted by our team and peer reviewed by our customers for you to explore before hiring.

Meet some of our Transfer And Assignment Agreement Lawyers

Jennifer T.

Hello! My name is Jennifer and I practice law in most areas of IP (copyright, trademark, ad tech) with a specialization in entertainment law. I have represented many different content and technology creators, negotiating master service agreements, talent agreements, production agreements, ad agency work, and other IP generalist work.

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My solo attorney law office is focused heavily on Family Law, but I also do residential real estate, and prepare Wills & Trusts.

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Attorney with 10 years experience focusing on corporate transactions and formations, real estate, and estate planning.

I have been practicing law for 18 years. I have worked in a mid-size firm environment where I was named a partner in 2014. In 2016, I left to start my own practice and work part-time. I handle most all corporate and transactional work and serve has outside general counsel for a number of companies

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Corporate Finance
Corporate Debt

Debt Assignment: How They Work, Considerations and Benefits

Daniel Liberto is a journalist with over 10 years of experience working with publications such as the Financial Times, The Independent, and Investors Chronicle.

Charlene Rhinehart is a CPA , CFE, chair of an Illinois CPA Society committee, and has a degree in accounting and finance from DePaul University.

Katrina Ávila Munichiello is an experienced editor, writer, fact-checker, and proofreader with more than fourteen years of experience working with print and online publications.

Investopedia / Ryan Oakley

What Is Debt Assignment?

The term debt assignment refers to a transfer of debt , and all the associated rights and obligations, from a creditor to a third party. The assignment is a legal transfer to the other party, who then becomes the owner of the debt. In most cases, a debt assignment is issued to a debt collector who then assumes responsibility to collect the debt.

Key Takeaways

Debt assignment is a transfer of debt, and all the associated rights and obligations, from a creditor to a third party (often a debt collector).
The company assigning the debt may do so to improve its liquidity and/or to reduce its risk exposure.
The debtor must be notified when a debt is assigned so they know who to make payments to and where to send them.
Third-party debt collectors are subject to the Fair Debt Collection Practices Act (FDCPA), a federal law overseen by the Federal Trade Commission (FTC).

How Debt Assignments Work

When a creditor lends an individual or business money, it does so with the confidence that the capital it lends out—as well as the interest payments charged for the privilege—is repaid in a timely fashion. The lender , or the extender of credit , will wait to recoup all the money owed according to the conditions and timeframe laid out in the contract.

In certain circumstances, the lender may decide it no longer wants to be responsible for servicing the loan and opt to sell the debt to a third party instead. Should that happen, a Notice of Assignment (NOA) is sent out to the debtor , the recipient of the loan, informing them that somebody else is now responsible for collecting any outstanding amount. This is referred to as a debt assignment.

The debtor must be notified when a debt is assigned to a third party so that they know who to make payments to and where to send them. If the debtor sends payments to the old creditor after the debt has been assigned, it is likely that the payments will not be accepted. This could cause the debtor to unintentionally default.

When a debtor receives such a notice, it's also generally a good idea for them to verify that the new creditor has recorded the correct total balance and monthly payment for the debt owed. In some cases, the new owner of the debt might even want to propose changes to the original terms of the loan. Should this path be pursued, the creditor is obligated to immediately notify the debtor and give them adequate time to respond.

The debtor still maintains the same legal rights and protections held with the original creditor after a debt assignment.

Special Considerations

Third-party debt collectors are subject to the Fair Debt Collection Practices Act (FDCPA). The FDCPA, a federal law overseen by the Federal Trade Commission (FTC), restricts the means and methods by which third-party debt collectors can contact debtors, the time of day they can make contact, and the number of times they are allowed to call debtors.

If the FDCPA is violated, a debtor may be able to file suit against the debt collection company and the individual debt collector for damages and attorney fees within one year. The terms of the FDCPA are available for review on the FTC's website .

Benefits of Debt Assignment

There are several reasons why a creditor may decide to assign its debt to someone else. This option is often exercised to improve liquidity and/or to reduce risk exposure. A lender may be urgently in need of a quick injection of capital. Alternatively, it might have accumulated lots of high-risk loans and be wary that many of them could default . In cases like these, creditors may be willing to get rid of them swiftly for pennies on the dollar if it means improving their financial outlook and appeasing worried investors. At other times, the creditor may decide the debt is too old to waste its resources on collections, or selling or assigning it to a third party to pick up the collection activity. In these instances, a company would not assign their debt to a third party.

Criticism of Debt Assignment

The process of assigning debt has drawn a fair bit of criticism, especially over the past few decades. Debt buyers have been accused of engaging in all kinds of unethical practices to get paid, including issuing threats and regularly harassing debtors. In some cases, they have also been charged with chasing up debts that have already been settled.

Federal Trade Commission. " Fair Debt Collection Practices Act ." Accessed June 29, 2021.

Federal Trade Commission. " Debt Collection FAQs ." Accessed June 29, 2021.

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Retirement Planning

Roth IRA Transfer Rules: What You Should Know

Find out about several ways to transfer Roth IRA funds

How To Do a Direct Roth IRA Transfer

60-day rollover rules for roth iras, five-year rule for roth ira withdrawals, roth conversion rules, frequently asked questions (faqs).

PrathanChorruangsak / Getty Images

Roth IRAs are retirement accounts that let your savings grow tax-free. You pay state and federal taxes as usual when adding money to the account, but pay no taxes on the contributions or earnings when you withdraw the money in retirement.

If you want to move a Roth IRA to a new broker, it’s important to make sure you understand the process. If you don’t follow the proper steps, you could face penalties.

Key Takeaways

Roth IRAs let your retirement savings grow tax-free.
You can move your Roth IRA from one broker to another.
If you don’t follow the proper process, you may have to pay penalties.
There are restrictions on when you can withdraw funds from a Roth IRA.

If you want to transfer your Roth IRA from one company to another, a direct transfer is likely the easiest path to take. With a direct transfer, you can move your assets straight to the new broker without having to sell them or deal with waiting on a check in the mail.

Usually, the best way to start the process is to talk to the company to which you want to transfer your Roth IRA. Brokers want your business, so they have an incentive to make the process as easy as possible for you.

Your new broker can tell you all the information that it needs and can help you work with your current broker to start the transfer process. In some cases, they’ll even communicate for you with the brokerage firm you’re leaving.

You’ll need to provide some details and confirm with your old broker that you want the transfer to go through. Your old broker may also charge an account closure or transfer fee, so be ready to pay that.

If everything goes smoothly, you can complete the entire process in as little as a week.

The more manual process for transferring a Roth IRA is to take advantage of the 60-day rollover rule. According to this rule, you can take funds out of a Roth IRA and avoid paying penalties or taxes so long as you return the funds to a Roth IRA within 60 days. There is a limit of one rollover per year.

To transfer your Roth IRA in this way, you can request a distribution from your old broker for the amount you want to transfer. The broker will send the funds to you by check or electronic deposit. However, there are risks to using this strategy.

One is that it requires selling your investments. If the market spikes while the funds are uninvested, you’ll miss out on potential gains.

Another is that if a check goes missing in the mail or some other emergency stops you from putting the money into a new Roth IRA within 60 days, you’ll face penalties.

You then have 60 days to open a new Roth IRA at a new brokerage and deposit the full amount that you distributed.

Early-Withdrawal Penalties for Roth IRAs

In exchange for the tax incentives that they offer, Roth IRAs place restrictions on withdrawals before you reach retirement age.

If you fail to complete your rollover within 60 days, the IRS will consider your withdrawal from the Roth IRA to be an early distribution. That means you can’t return the funds to the Roth IRA, missing out on future tax-free gains.

You’ll also be subject to taxes and penalties. While withdrawals of contributions are tax-free, you’ll pay income tax on any earnings withdrawn, plus a 10% penalty on those earnings.

With Roth IRAs, there is a five-year waiting period before you can make withdrawals. This is true even if you’ve reached retirement age. You must have had the account for at least five years before you can begin making tax and penalty-free withdrawals.

Withdrawals of earnings before you reach the 5-year minimum will be taxed, even if you’re past retirement age. The only exceptions are:

Withdrawing up to $10,000 for a first-time home purchase
Withdrawals to pay for qualified education, birth, or adoption expenses
You become disabled or die
Withdrawals to pay for unreimbursed medical expenses
Withdrawals to pay for health insurance while unemployed
Substantially equal periodic payments

If you have a pretax retirement account, like a traditional IRA or 401(k), it’s possible to convert some or all of that balance to a Roth IRA. This can let you take advantage of the tax-free growth Roth IRAs offer.

Rules for converting to a Roth IRA are similar to those for completing a rollover. Failure to follow the proper process can result in penalties and taxes.

The main difference to keep in mind is that you’ll owe income tax on the converted balance.

How much can you transfer from a traditional IRA to a Roth IRA?

There is no limit on how much money you can convert from a traditional IRA to a Roth IRA. You can convert a portion or the entirety of your balance. However, you will have to pay income tax on the converted amount.

How long does a Roth IRA transfer take?

How long a Roth IRA transfer takes varies depending on your situation, brokers, and how you complete the transfer. A direct transfer can take a week or two. If you use the 60-day rollover rule, it typically takes longer, but should not take longer than 60 days.

Want to read more content like this? Sign up for The Balance’s newsletter for daily insights, analysis, and financial tips, all delivered straight to your inbox every morning!

IRS. “ Rollovers of Retirement Plan and IRA Distributions .”

FINRA. “ 401(k) Rollovers .”

Charles Schwab. “ Roth IRA Withdrawal Rules .”

29 Jan 2024

Patent Assignment: How to Transfer Ownership of a Patent

By Michael K. Henry, Ph.D.

Intellectual Property
Patent Prosecution

This is the second in a two-part blog series on owning and transferring the rights to a patent. ( Read part one here. )

As we discussed in the first post in this series, patent owners enjoy important legal and commercial benefits: They have the right to exclude others from making, selling, using or importing the claimed invention, and to claim damages from anyone who infringes their patent.

However, a business entity can own a patent only if the inventors have assigned the patent rights to the business entity. So if your employees are creating valuable IP on behalf of your company, it’s important to get the patent assignment right, to ensure that your business is the patent owner.

In this post, we’ll take a closer look at what a patent assignment even is — and the best practices for approaching the process. But remember, assignment (or transfer of ownership) is a function of state law, so there might be some variation by state in how all this gets treated.

What Is a Patent Assignment and Why Does it Matter?

A patent assignment is an agreement where one entity (the “assignor”) transfers all or part of their right, title and interest in a patent or application to another entity (the “assignee”).

In simpler terms, the assignee receives the original owner’s interest and gains the exclusive rights to pursue patent protection (through filing and prosecuting patent applications), and also to license and enforce the patent.

Ideally, your business should own its patents if it wants to enjoy the benefits of the patent rights. But under U.S. law , only an inventor or an assignee can own a patent — and businesses cannot be listed as an inventor. Accordingly, patent assignment is the legal mechanism that transfers ownership from the inventor to your business.

Patent Assignment vs. Licensing

Keep in mind that an assignment is different from a license. The difference is analogous to selling versus renting a house.

In a license agreement, the patent owner (the “licensor”) gives another entity (the “licensee”) permission to use the patented technology, while the patent owner retains ownership. Like a property rental, a patent license contemplates an ongoing relationship between the licensor and licensee.

In a patent assignment, the original owner permanently transfers its ownership to another entity. Like a property sale, a patent assignment is a permanent transfer of legal rights.

U sing Employment Agreements to Transfer Patent Ownership

Before your employees begin developing IP, implement strong hiring policies that ensure your IP rights will be legally enforceable in future.

If you’re bringing on a new employee, have them sign an employment agreement that establishes up front what IP the company owns — typically, anything the employee invents while under your employment. This part of an employment agreement is often presented as a self-contained document, and referred to as a “Pre-Invention Assignment Agreement” (PIAA).

The employment agreement should include the following provisions:

Advance assignment of any IP created while employed by your company, or using your company’s resources
An obligation to disclose any IP created while employed by your company, or using your company’s resources
An ongoing obligation to provide necessary information and execute documents related to the IP they created while employed, even after their employment ends
An obligation not to disclose confidential information to third parties, including when the employee moves on to a new employer

To track the IP your employees create, encourage your employees to document their contributions by completing invention disclosure records .

But the paperwork can be quite involved, which is why your employment policies should also include incentives to create and disclose valuable IP .

Drafting Agreements for Non-Employees

Some of the innovators working for your business might not have a formal employer-employee relationship with the business. If you don’t make the appropriate arrangements beforehand, this could complicate patent assignments. Keep an eye out for the following staffing arrangements:

Independent contractors: Some inventors may be self-employed, or they may be employed by one of your service providers.
Joint collaborators: Some inventors may be employed by, say, a subsidiary or service company instead of your company.
Anyone who did work through an educational institution : For example, Ph.D. candidates may not be employees of either their sponsoring institution or your company.

In these cases, you can still draft contractor or collaborator agreements using the same terms outlined above. Make sure the individual innovator signs it before beginning any work on behalf of your company.

O btaining Written Assignments for New Patent Applications

In addition to getting signed employment agreements, you should also get a written assignments for each new patent application when it’s filed, in order to memorialize ownership of the specific patent property.

Don’t rely exclusively on the employment agreement to prove ownership:

The employment agreement might contain confidential terms, so you don’t want to record them with the patent office
Because employment agreements are executed before beginning the process of developing the invention, they won’t clearly establish what specific patent applications are being assigned

While you can execute the formal assignment for each patent application after the application has been filed, an inventor or co-inventor who no longer works for the company might refuse to execute the assignment.

As such, we recommend executing the assignment before filing, to show ownership as of the filing date and avoid complications (like getting signatures from estranged inventors).

How to Execute a Written Patent Agreement

Well-executed invention assignments should:

Be in writing: Oral agreements to assign patent rights are typically not enforceable in the United States
Clearly identify all parties: Include the names, addresses, and relationship of the assignor(s) and assignee
Clearly identify the patent being assigned: State the patent or patent application number, title, inventors, and filing date
Be signed by the assignors
Be notarized : If notarization isn’t possible, have one or two witnesses attest to the signatures

Recording a Patent Assignment With the USPTO

Without a recorded assignment with the U.S. patent office, someone else could claim ownership of the issued patent, and you could even lose your rights in the issued patent in some cases.

So the patent owner (the Assignee) should should record the assignment through the USPTO’s Assignment Recordation Branch . They can use the Electronic Patent Assignment System (EPAS) to file a Recordation Cover Sheet along with a copy of the actual patent assignment agreement.

They should submit this paperwork within three months of the assignment’s date. If it’s recorded electronically, the USPTO won’t charge a recordation fee .

Need to check who owns a patent? The USPTO website publicly lists all information about a patent’s current and previous assignments.

When Would I Need to Execute a New Assignment for a Related Application?

You’ll need only one patent assignment per patent application, unless new matter is introduced in a new filing (e.g., in a continuation-in-part , or in a non-provisional application that adds new matter to a provisional application ). In that case, you’ll need an additional assignment to cover the new matter — even if it was developed by the same inventors.

What If an Investor Won’t Sign the Written Assignment?

If you can’t get an inventor to sign an invention assignment, you can still move forward with a patent application — but you’ll need to document your ownership. To document ownership, you can often rely on an employee agreement , company policy , invention disclosure , or other employment-related documentation.

D o I Need to Record My Assignments in Foreign Countries?

Most assignments transfer all rights, title, and interest in all patent rights throughout the world.

But in some countries, the assignment might not be legally effective until the assignment has been recorded in that country — meaning that the assignee can’t enforce the patent rights, or claim damages for any infringement that takes place before the recordation.

And there might be additional formal requirements that aren’t typically required in the United States. For example, some countries might require a transfer between companies to be signed by both parties, and must contain one or both parties’ addresses.

If you’re assigning patents issued by a foreign country, consult a patent attorney in that country to find out what’s required to properly document the transfer of ownership.

N eed Help With Your Patent Assignments?

Crafting robust assignment agreements is essential to ensuring the proper transfer of patent ownership. An experienced patent professional can help you to prepare legally enforceable documentation.

Henry Patent Law Firm has worked with tech businesses of all sizes to execute patent assignments — contact us now to learn more.

GOT A QUESTION? Whether you want to know more about the patent process or think we might be a good fit for your needs – we’d love to hear from you!

Michael K. Henry, Ph.D.

Michael K. Henry, Ph.D., is a principal and the firm’s founding member. He specializes in creating comprehensive, growth-oriented IP strategies for early-stage tech companies.

10 Jan 2024

Geothermal Energy: An Overview of the Patent Landscape

By Michael Henry

Don't miss a new article. Henry Patent Law's Patent Law News + Insights blog is designed to help people like you build smart, scalable patent strategies that protect your intellectual property as your business grows. Subscribe to receive email updates every time we publish a new article — don't miss out on key tips to help your business be more successful.

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Non-group companies. Assets can be transferred between two separate limited companies (i.e., which do not form part of a group), but it should be noted that Capital Gains Tax (CGT) will be payable by the recipient company if the assets are transferred free of charge or below the fair market price. Transfer of shares service - only £69.99 ...
Assignment of Interest In LLC: Everything You Need to Know
The assignment will be effective until the debt is cleared. An assignment of interest can also' be done to a member's legal heirs, going into effect upon the death of a member. The Rights and Limitations of the Assignee. The laws governing LLC membership interest assignments vary considerably from one state to another.
Transferring Assets from one company to another
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A capital contribution is an asset given to your LLC in exchange for equity (the value of your ownership percentage). An asset can be cash, property, or professional services. Most capital contributions are tax-free. If you initially invest $10,000 in your LLC as a capital contribution, you would receive $10,000 of equity.
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Selling your business assets. One of the best ways to transfer assets, without having all of the assets and liabilities moved from one corporation to another, is to sell them from the first corporation to the second at a fair market price. If you're selling assets, you'll also need to consider the chargeable gain and resulting capital gains tax ...
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Size 2 to 3 pages. 4.8 - 951 votes. Fill out the template. An LLC Membership Interest Assignment is a document used when one member of an LLC, also known as a limited liability company, wishes to transfer their interest to another party entirely. LLC Membership Interest Assignments are often used where a member in an LLC is leaving or otherwise ...
Sale and Assignment of LLC Membership Interests
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How to Transfer Assets to an LLC
Assigning or transferring a tenant's rights in a lease from one party to another will often require the consent of the original lessor, or person who actually owns the building being leased. Convert your partnership to an LLC. In the event you are one of the partners in a partnership and you, along with other partners, desire to form an LLC ...
What should you think about before assigning IP or assets from one
Consider the following: Some entities may require board or managerial consent before assigning or transferring assets or intellectual property, especially if it is a major assignment (such as a corporate restructuring, acquisition or spin-out transaction). Some contracts may have Non-Assignment provisions that would prohibit transfer or assignment.
How can I transfer assets from one of my corporations to another
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Do existing contracts get automatically transferred to the acquiring
make new contracts on the same or similar terms with the other party. Contracts are never "automatically transferred", the party transferring from and the one transferring to have to make the transfer happen, usually they make a contract. Because contracts usually contain both rights and obligations, transferring one will be good consideration ...
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Transfer And Assignment Agreement: Definition & Sample
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Sample Clauses. Assignment of Assets. Subject to Sections 1.1 and 1.2, Assignor does hereby grant, assign, bargain, sell and transfer to Assignee, its successors and assigns, in trust, for the benefit of all the Assignor 's creditors generally, all of the property and assets of Assignor of every kind and nature wherever situated, whether in ...
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Assignment. Assignment involves the transfer of an interest or benefit from one person to another. However the 'burden', or obligations, under a contract cannot be transferred. Assignment in construction contracts. As noted above only the benefits of a contract can be assigned - not the burden. In the context of a building contract:
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Roth IRA Transfer Rules: What You Should Know
If you want to transfer your Roth IRA from one company to another, a direct transfer is likely the easiest path to take. With a direct transfer, you can move your assets straight to the new broker without having to sell them or deal with waiting on a check in the mail.
Patent Assignment: How to Transfer Ownership of a Patent
A patent assignment is an agreement where one entity (the "assignor") transfers all or part of their right, title and interest in a patent or application to another entity (the "assignee"). In simpler terms, the assignee receives the original owner's interest and gains the exclusive rights to pursue patent protection (through filing ...

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Why would I want to transfer assets between companies?

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Diversification

Pre-sale preparation

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Author: Nicholas Campion

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Let's look at how transferring assets works.

The following information should be recorded in your Operating Agreement:

Sale & Purchase

Filing an Asset Transfer Document

Fraudulent Transfer of Assets

How does it work?

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LLC Membership Interest Assignment

Business Structure - Other downloadable templates of legal documents

Sale and Assignment of LLC Membership Interests

Introduction

APPLICABLE LAW

Statute Authorizing LLC Membership Assignments

What category of property is an LLC membership interest?

Statutory Qualifications for LLC Membership

Rights and Duties of an Assignee

PRELIMINARY CONSIDERATIONS

Non-Member Spouses

What will be the accounting consequences? Is timing an issue?

Will the membership interest pass a due-diligence inspection?

DUE DILIGENCE BY THE ASSIGNEE-BUYER

CLAUSES AND PROVISIONS OF THE ASSIGNMENT

Representations and Warranties

Examples of Reps and Warranties

Reps and Warranties: Duration and Default

Assignments Made “As Is”

Covenants and Agreements of the Parties

Recourse by Assignee upon Occurrence of Specified Conditions

Mutual Indemnity

Non-Compete and Non-Disclosure Provisions

Corporate Transparency Act and FinCEN Reporting

Alternative Dispute Resolution: Mandatory Mediation

Special Provisions and Stipulations

No Reliance and No Representation Clauses

Wrap-Up Provision Relating to Execution and Delivery of Documents and Records

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Transferring Assets to an LLC: Everything You Need to Know

How to Transfer Assets to an LLC

Steps for Transferring Assets to an LLC

What Is a Fraudulent Transfer of Assets?

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How to Transfer Assets to an LLC

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Trademark Assignments: How to Buy, Sell, Or Transfer A Trademark

A Trademark Assignment Transfers Trademark Rights

Common Issues with Preparing and Filing Assignments

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Eric Perrott, Esq.